Introduction Nevada can become the leader in transforming the casino floor into a predominantly cashless environment, and the commentary is only growing as to why the Covid-19 pandemic is forcing the casino industry to reimagine touchless solutions.1 The Center for Disease Control's (CDC) guidelines regarding this matter are straightforward: "Use touchless payment options as much as possible, if available."2 This includes "tap-and-pay to limit handling of cash" as part of proper hygiene measures to prevent the spread of Covid-19.3 The pandemic, however, is not the sole impetus for change but rather an accelerator to mimic the developments occurring in most domestic and international consumer markets. Even before the pandemic, the United States was heading toward a cashless economy. Cash transactions, continuing their gradual decline, represented only 26 percent of all payments made in 2018.4 In contrast, the dominant form of electronic transfers and credit cards have only continued to grow in the US. While 63.8 percent of consumers had a least one credit card in 2015, this number rose to 68.7 percent by 2017,5 and by mid-2019, the Federal Reserve Bank of Atlanta found that 75.5 percent of consumers had at least one credit card.6 Not only do customers have credit cards, but they are using them extensively for all purchases. Pew Research Center found that almost a third of American adults made "no purchases using cash during a typical week," and nearly half are no longer are concerned with carrying any cash.

In addition, the use of electronic transfers has become ubiquitous, regardless of the amount spent. In the past four years, the use of paper currency for transactions under $20 has dropped from 46 to 37 percent. In 2015, about half of US consumers used their card for an $8 sale. By 2019, half of all US consumers used their cards for purchases as low as $4.50.7 This study focuses on the leading technologies for electronic transfers not yet available for casino play. It examines the benefits and challenges that a cashless environment has in the casino environment for the government, casinos, and the patron. This study then

1 Wayne Parry, US casinos push for cashless gambling payments, citing virus, Associated Press, June 16, 2020 https://abcnews.go.com/US/wireStory/us-casinos-push-cashless-gambling-payments-citing-virus-71271323, Contessa Brewer, Coronavirus may sway regulators to allow casinos to say good-bye to cash, June 16, 2020, https://www.cnbc.com/2020/06/16/coronavirus-may-sway-regulators-to-allow-casinos-to-say-good-bye-to-cash.html 2https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/business-employers/bars-restaurants.html, Considerations for Restaurants and Bars, https://www.cdc.gov/coronavirus/2019-ncov/community/organizations/business-employers/bars-restaurants.html (July 17, 2020) 3Contessa Brewer, Coronavirus may sway regulators to allow casinos to say good-bye to cash, June 16, 2020, https://www.cnbc.com/2020/06/16/coronavirus-may-sway-regulators-to-allow-casinos-to-say-good-bye-to-cash.html 4 Raynil Kumar and Shaun O’Brien, 2019 Findings from the Diary of Consumer Payment Choice, June 2019, https://www.frbsf.org/cash/publications/fed-notes/2019/june/2019-findings-from-the-diary-of-consumer-payment-choice/ 5https://hbr.org/2019/07/is-the-u-s-on-its-way-to-becoming-a-cashless-society 6 The Federal Reserve Bank of Atlanta’s 2018 Survey of Consumer Payment Choice, August 2019, https://www.frbatlanta.org/banking-and-payments/consumer-payments/survey-of-consumer-payment-choice 7 Shelle Santana, Is the U.S. on Its Way to Becoming a Cashless Society? July 23, 2019, https://hbr.org/2019/07/is-the-u-s-on-its-way-to-becoming-a-cashless-society

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recommends statutory and regulatory changes to accelerate the shift from a cash-based environment to one that is strictly cashless.

Electronic Transfers Credit cards are only one form of a myriad of financial transactions whereby customers can electronically transfer funds digitally between the involved parties. Electronic transfers replace not only banknotes and coins but other physical forms of transfer, such as paper checks and drafts. Types of Transfers Before electronic transfers, typical forms of cashless payments were checks and bank drafts.8 Today, the prevalent types of electronic transfers are: Online Bank Transfers account for about 6 percent of all transactions in North America.9 In the United States, this is done primarily through The Automated Clearing House (ACH) Network, an electronic funds-transfer system. The NACHA (formerly the National Automated Clearing House Association) has operated the network since 1974.10 However, customers rarely use online bank transfer in a retail environment. This payment methodology is common with payroll, direct deposit, tax refunds, consumer bills, tax payments, and other payment services in the United States.11 In the first quarter of 2020, the ACH Network processed 6.4 billion in payments, a 7 percent increase from that same period in 2019. The total value of those first-quarter payments was $14.6 trillion, a 10.3 percent increase from the year earlier.12 Some high-roller casino patrons prefer ACH transfers.13 Credit and Debit Card Payments account for about 35 percent of all transactions,14 combined, but 50 to 60 percent of all payments in the $10-100 bracket.15 Major credit card companies include Visa, Mastercard, American Express, Discover, and Diners Club. The bank that uses a credit card extends credit in the amount of each purchase. The balances on credit card charges accrue interest (APR) if they are not paid in full each month. They

8 A demand draft never gets defaulted as it is signed by the banker. 9 J. Clement, Share of selected payment methods as percentage of total e-commerce transaction volume worldwide in 2019, by region, Apr 20, 2020, https://www.statista.com/statistics/348004/payment-method-usage-worldwide/ 10 https://www.investopedia.com/terms/n/nacha.asp 11 The originator initiates a direct deposit, either debit or credit, using the ACH Network. The originator's bank, or originating depository financial institution (ODFI), then accepts the transaction and batches it with other ACH transactions and regularly transmits throughout a day. Next, the Federal Reserve or a clearinghouse receives the ACH batch that includes the originator's transaction, sorts the batch, and presents them to the intended recipient’s bank or financial institution, called the receiving depository financial institution (RDFI). The recipient's bank account then receives and reconciles the transactions. https://www.investopedia.com/terms/a/ach.asp 12 ACH Network Volume Statistics, Feb. 4, 2019, https://www.nacha.org/content/ach-network-volume-statistics 13 Jeremiah Booker, Online Gambling Banking Methods: ACH vs Bank Transfer, February 16, 2020, https://www.bestuscasinos.org/blog/ach-vs-bank-transfer-online-gambling-banking-methods/ 14 Share of selected payment methods as percentage of total e-commerce transaction volume worldwide in 2019, by region, https://www.statista.com/statistics/348004/payment-method-usage-worldwide/ 15 J. Andjelic, Paper or Plastic? The Definitive List of Cash Versus Credit Card Spending Statistics, July 16, 2019, https://fortunly.com/statistics/cash-versus-credit-card-spending-statistics/

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can also incur annual fees and fees for balance transfers, cash advances, foreign transactions, and late payments.16 Credit cards often offer benefits, such as cash or travel rewards, fraud protection services, and travel insurance. Many consumers use credit cards for the rewards programs, including cashback. A debit card, on the other hand, is linked to a checking account and allows the cardholder to make purchases. Debit cards work like cash in that the patron, who is subject to daily limits imposed by his or her bank, can make purchases that the bank will then deduct directly from the customer's checking account.17 Debit cards typically do not offer rewards or carry many fees except for overdrafts or withdrawing cash from an ATM at another bank.18 Businesses generally prefer debit cards because retailers pay a percentage of the total purchase price for processing credit card payments.19 Merchants must pay interchange fees, assessment fees, and processing fees to accept credit card payments.20 The average credit card processing fee can range from about 1.3 to 3.4 percent, which is not including the payment processor's fee.21 Factors that influence the fee are merchant categories (the type of business), the benefits associated with the card, and whether the card is present (swiped or using RFID) versus not present, such as an online transaction.22 E-wallet payment systems store bank, credit, and debit card information on a mobile device. In the United States, E-wallet transactions make up about 24% of all cashless transactions, but almost 60% in the Asia Pacific.23 A consumer typically uses an e-wallet either by holding his or her phone near a special payment terminal in-store or by using the e-wallet app for in-app or web purchases.24 Wallet transactions use a variety of technologies such as near field communication (NFC)25 "pay" wallets, cloud-based card-on-file wallets, cloud-based card-on-file card network digital "checkout" wallets or closed-loop merchant or

16 Alexandria White, Credit card vs. debit card: What’s the difference? CNN, Jul 22 2020, https://www.cnbc.com/select/credit-card-vs-debit-card/ 17 Id. 18 Id. 19 Justin Pritchard, Why the Choice Between Debit or Credit Matters, Who Pays Interchange Fees?, The Balance, July 03, 2020, https://www.thebalance.com/debit-or-credit-315293 20 https://www.choicefunding.net/average-credit-card-processing-fees-and-costs-in-2019/ 21 Average Credit Card Processing Fees and Costs in 2020, July 8, 2020, https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/#:~:text=To%20process%20credit%20card%20payments%2C%20merchants%20must%20pay,fees%20cost%20between%200.10%25%20and%200.15%25%20per%20transaction. 22https://www.fool.com/the-ascent/research/average-credit-card-processing-fees-costs-america/#:~:text=To%20process%20credit%20card%20payments%2C%20merchants%20must%20pay,fees%20cost%20between%200.10%25%20and%200.15%25%20per%20transaction. Id. 23 J. Clement, Share of selected payment methods as percentage of total e-commerce transaction volume worldwide in 2019, by region, Apr 20, 2020, https://www.statista.com/statistics/348004/payment-method-usage-worldwide, https://www.statista.com/statistics/348004/payment-method-usage-worldwide/ 24 A cardholder’s guide to paying with your mobile wallet, https://www.bankrate.com/finance/credit-cards/mobile-wallet-payment-option/ 25 Near-field communication (NFC) is a set of communication protocols for communication between two electronic devices over ½ inches or less.

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financial institution quick reference code closed wallets.26 Most mobile wallet apps use encryption and tokenization technology for security like that used by the newer chip cards.27 Some can be used in a large number of establishments like Apple Pay, Samsung Pay, Google Pay, Zell, and Venmo,28 while others are store-branded wallets, such as Walmart Pay and Starbucks. Almost 25 percent of American consumers used E-wallets for retail sales in 2019.29 Prepaid Cards account for less than one percent of all transactions. A prepaid card is a secure card allowing the customer to draw against a previously deposited cash balance. The Nevada gaming industry has reviewed permitting prepaid cards in a casino setting, but their disfavor in the marketplace has hindered widespread use.30 Touchless Solutions E-wallet and card transactions, the most popular form of electronic transfers in consumer settings, have evolved into convenient single-step, contactless transactions. Patrons using these electronic transfer methods can purchase products or services using a debit, credit, or smartcard—also known as a chip card—with radio frequency identification (RFID),31 or by using an e-wallet on a smartphone with NFC. Both RFID and NFC allow the cardholder to complete an electronic transfer of funds without a single point of contact with a person or a device. Most banks offer contactless payment cards and fully equipped terminals for the system.32 A customer initiates a transaction on a merchant's point-of-sale terminal, usually indicated by a contactless payment symbol (typically a wi-fi logo turned onto its side). After the system prompts the customer, they then hold the card (or smartphone; see infra) a few inches from the terminal's contactless symbol. The system then accepts the tap and responds with feedback, either through a beep, green light, or checkmark. The whole transaction process takes only a few seconds.33 These contactless systems not only eliminate cash but speed up transactions by eliminating the need for a customer to enter a PIN and forgo the need for the patron or the establishment's employees to have any contact with foreign surfaces. In the case of e-wallets, the

26 Wallet Overview of Laws, Regulations And References On Payment Security (Including Challenges And Improvement Opportunities), https://securepaymentstaskforce.org/learn-how-payments-work/payment-profiles/wallet/wallet-regulations-overview/. 27 https://www.nayax.com/mobile-payment-security/ 28 J. Clement Mobile payments in the United States - Statistics & Facts, Oct 1, 2019, https://www.statista.com/topics/982/mobile-payments/ 29 https://www.pymnts.com/automated-retail/2019/mobile-payments-digital-wallets/ 30 Richard N. Velotta, Use of prepaid cards for slot play worries problem gambling advocates, January 24, 2014, https://vegasinc.lasvegassun.com/business/gaming/2014/jan/24/use-prepaid-cards-slot-play-worries-problem-gambli/ 31 RFID includes technology that uses radio waves to identify people or objects carrying encoded microchip technology. 32Julia Kagan, Contactless Payment, Investopedia, May 29, 2020, https://www.investopedia.com/terms/c/contactless-payment.asp#:~:text=Contactless%20payment%20is%20a%20secure%20method%20for%20consumers,that%20is%20equipped%20with%20the%20contactless%20payment%20technology. 33 Id.

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establishment can directly transfer money to the customer's account. This is more difficult with credit cards that typically limit credits to the amount of the customer's debit.34

Cashless Wagering Systems A cashless wagering system is a computer system that casinos use to credit and debit a patron's account based on their respective wins and losses. Patrons can use electronic, cash, and paper transfers to fund and withdraw from the cashless wagering system accounts. Singapore recently provided a narrower description of a cashless wagering system. The Singapore gaming regulators issued a policy paper that states: "A CWS [Cashless Wagering System] is characterized as a host system whereby a player maintains an electronic wagering account on the CWS host database. A casino will provide the player with a secure means of accessing the wagering account on the gaming machines. This is not limited to the issuing of a unique magnetic card and Personal Identification Number (PIN) in conjunction with the wagering account on the CWS database. …. The account value can be reduced either through debit transactions, in smaller amounts at a gaming machine, or by cashing out. Once play is completed, the player may have the option to move some of the credits back to the player's account or cash out some credits."35

34The credit card begins when a cardholder swipes their card, or hands over their payment information to the merchant. The merchant collects the payment information either physically in a “card-present” transaction typically with a card reader, or online in a card not present transaction where the merchants uses an online gateway to collect the payment from their customer. The merchant has a contract with a payment processor that collects information and sends it to the card network. The payment processor can be the merchant’s bank or a third-party processor. The merchant or acquiring bank is the bank with which a business or merchant holds its funds. The acquiring bank may serve as a processor. The processor secures the payment data, and assures all transactions adhere to rules set out by the Payment Card Industry Data Security Standard (PCI DSS). Processors collect a fee from merchants for providing this service. Typically, the customer uses one of the major credit card networks such as Visa, Mastercard, American Express, or Discovery. Every business that applies to accept credit cards is assigned a four-digit number by the credit card networks (Visa, MasterCard, Discover, American Express) called a merchant category code, or MCC. The number denotes the type of business or service it is in. Merchant category codes are used by credit card networks to categorize, track, or restrict certain types of purchases. After the payment processor receives the information, it uses the credit card network to communicate it to the consumer’s bank, which verifies whether the cardholder has the appropriate funds or credit to complete the transaction. Networks are also responsible for setting interchange and assessment fees by the networks. While the networks set these fees, they do not collect all of them; they pass the interchange fees to the issuing bank. Networks collect assessment fees that are a fraction of the interchange fees. The consumer bank, also known as the issuing bank, conducts security measures to verify whether the purchase is legitimate or fraudulent. Once verified, the consumer bank sends a message back through the network and the credit card processor approves the transaction. The cardholder bank may deny a transaction for insufficient funds, a transaction that exceeds the total or daily credit limit, or suspicious activity. The approval or denial is then transmitted through the network to the merchant. If cleared, the merchant completes the transaction. No funds, however, are released until the transaction is completely settled, which may take a few days. The funds then flow from the consumer bank to the merchant bank for credit to the merchant’s account. https://www.valuepenguin.com/credit-card-processing/how-credit-card-processing-works 35 TECHNICAL STANDARDS FOR CASHLESS WAGERING SYSTEM (SINGAPORE). https://www.cra.gov.sg/docs/default-source/casino-regulations/technical-standards-for-cashless-wagering-system-(official-release-version-1-1-).pdf

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This refined definition, while limiting the funding mechanisms and cash-out procedures, is reflective of the technologies employed in cashless wagering in the gaming industry and succinctly describes the systems that are and have been in place in Nevada and elsewhere. Nevada's Definitions of a Cashless Wagering System Are Imprecise and Inconsistent. The section of the Nevada Gaming Control Act originating from 1993 defines a "cashless wagering system" as "a method of wagering and accounting in which the validity and value of a wagering instrument or wagering credits are determined, monitored, and retained by a computer that maintains a record of each transaction involving the wagering instrument or wagering credits, exclusive of the game or gaming device on which wagers are being made. The term includes computerized systems which facilitate electronic transfers of money directly to or from a game or gaming device."36 In contrast, Nevada Gaming Commission regulation defines a "cashless wagering system" as "the collective hardware, software, communications technology, and other associated equipment used to facilitate wagering on any game or gaming device including mobile gaming systems and interactive gaming systems with other than chips, tokens or legal tender of the United States."37 Aside from the questionable practice of having a regulation set out a different definition of a term from the enabling statute, the Nevada regulation is even less precise and broader in scope than the statute. Together, these definitions confuse the scope of the term and who must comply with licensing and other requirements under the Gaming Control Act. The overbroad definition in the regulations results in regulatory requirements that should be more narrowly tailored to actual cashless wagering systems as well as to avoid staff interpretations that apply the statute to broader technologies, even though no policy rationale exists for their extension. Furthermore, the combined definitions are both inconsistent with the intent of the original statute and the public policy goals that accompanied its passage. In 1992, the gaming industry suppliers were proffering two competing systems for use on the casino floor. According to the testimony of then Nevada Gaming Control Board Chair Bill Bible, the competition was between a ticket-In, ticket-out (TITO) system, and a card-based system. These, according to Bible, were limited in scope and use and would not include electronic transfer systems and credit and debit cards because "the control board has not allowed any application of play against a credit card or automatic bank teller card."38 The systems were solely a host system whereby a player maintained an electronic wagering account on the host database where amounts were added by deposits or winning and subtracted by withdrawals or losses. The systems themselves were separate from the means of deposits and withdrawals, which at the time were severely limited. The stated purpose of requiring licensing and regulations was to thwart cheating "activities in reference to cashless wagering systems." This underpinning statute has

36 NRS 463.014 37 NGC Regulation 14.010 38 www.leg.state.nv.us. https://www.leg.state.nv.us/Session/67th1993/93minutes/S_JD_614.html

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since led to very little innovation in the past three decades in relation to cashless payments in the casino industry. Moreover, it was founded on a policy consideration (the prospect of patron cheating) that is far less valid in modern eCommerce. Ticket In, Ticket Out (TITO) TITO is a 30-year-old technology but still the primary system used in Nevada casinos.39 This proprietary wallet system is usable only at each casino property. TITO is not, however, a cashless payment system. Instead, TITO effectively eliminated coins and tokens while still principally relying on paper currency to operate. TITO systems allow for anonymous play. To start, a patron typically inserts paper currency into the slot machine to establish an account, which can be anonymously, or the player can insert his or her players' club card to allow the casino to track individual play. The patron receives credits on the device equal to the value of the currency inserted. The patron then plays.40 After gambling, if the patron still has credits, he or she requests the device to issue a paper slip with a barcode showing the amount of money represented.41 The patron can redeem these slips at an automated kiosk for currency or use them in another slot machine and receive credit in the amount of the slip.42 The devices use a barcode scanner built into the bill acceptor, a thermal ticket printer instead of a coin hopper, and a network interface to communicate with a central system that tracks tickets.43 TITO was a significant development in the early 1990s because it eliminated coins and tokens from slot machines altogether. This ended the classic era of coin-fed slot machines and dramatic coin disbursement hoppers. Casinos no longer needed to transport coin from the device to the now obsolete hard count rooms. Casino floors no longer required change booths and change attendants. Besides cost savings, TITO reduced losses from slot machines by cheaters using techniques such as slugging, stringing, and devices to cause slot machines to drop the coins or tokens in their hoppers without a corresponding win. This also prevented employee theft and unscrupulous owners from using the hard count to skim revenues before they were counted for tax purposes.44 TITO-enabled devices, however, are still vulnerable to cheating using forged currency or tools designed to trick the bill accepter. The soft count room is still needed and susceptible to employee theft and skimming and provides less precise accounting than cashless wagering. The use of legal tender also complicates the effectiveness of internal controls

39 MGM purchased this technology in the early 90s and developed a system in conjunction with the owner of a patented bill validator that read bar-coded tickets and accepted cash. MGM then created a consortium of game manufacturers and developed a protocol for its custom universal interface board Later, IGT acquired the rights to the TITO patents and modified their protocol called SAS to implement TITO. https://en.wikipedia.org/wiki/Ticket-in,_ticket-out. 40 Id. 41 Id. 42 Slot machine maker taking a chance with cashless slots system, Jan. 27, 2001, The patron can, in rare circumstances, lose the slip along with its corresponding value. https://lasvegassun.com/news/2001/jan/27/slot-machine-maker-taking-a-chance-with-cashless-s/ 43 https://en.wikipedia.org/wiki/Ticket-in,_ticket-out. 44 Wallace Turner, Reputed Organized Crime Heads Named In Casino Skimming Case, New York Times, Oct. 12, 1983https://www.nytimes.com/1983/10/12/us/reputed-organized-crime-heads-named-in-casino-skimming-case.html

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and anti-money laundering procedures, thus impacting the overall accuracy of revenue accounting. Newer technologies are expanding the functionality of the TITO systems. For example, Everi Holdings' CashClub Wallet allows patrons to receive winnings deposited into a digital wallet in exchange for tickets deposited into kiosks. Everi's QuikTicket enables a patron to use a kiosk in the casino withdraw money from a debit card and receive a TITO ticket in return, then use that ticket at a slot machine or table. JCM Global's ITITO product enables patrons to use their mobile phones via NFC to complete buy-in and cash-out transactions at any slot machine or kiosk. Secure Cashless Wallet System Unlike TITO, the card-based system that Chair Bible discussed in 1992 was far less successful, but products based on the same concept have reappeared. This system is like TITO, but instead of the devices rendering vouchers, the player must have a card that is read by the device he or she is playing, and winnings and losses are stored on the host system. These systems can use the same card and system as player loyalty or club cards standard in Nevada casinos. Most systems use a physical casino-issued player card unique to the individual that the patron must physically insert into the gaming device. Some systems are moving to a virtual player card where the player can store the card on a mobile device, and the gaming device will recognize the player's mobile device using NFC technology. While eliminating the TITO vouchers, the player must establish an account with the casino to use the system, although the concept of issuing anonymous use cards, like prepaid cards, is still feasible. Moreover, while eliminating coins and tokens, it generally relies on banknotes to operate and initially fund the account. To begin, patrons typically insert currency into the slot machine to fund an existing account. The patron then plays, either winning or losing. If, after play on that machine, the patron has credits, the amount of credits remains in his or her account. The patron can withdraw the card and insert it at another gaming position and continue to play with the remaining credits. These patrons can also redeem these slips for currency at an automated kiosk.

Electronic Transfers in Nevada Casinos In a consumer-friendly casino environment, patrons would have the same options to fund their casino play as they would in any given retail establishment. For example, they could use cash, credit or debit cards, mobile wallets, or prepaid cards. The patron also could decide whether to use a contactless method of payment and not provide any personal information to the retailer. A patron's experience with electronic transfers in Nevada casinos, however, is much different. Nevada has few opportunities for electronic transfers in its casinos and none with the ease of contactless, one step card, or e-wallet transactions that are typically found in other businesses. This is due to regulatory restrictions and the hesitancy of payment solution providers to fund gambling transactions directly. In most cases, patrons wishing to use credit or debit cards must use third-party kiosks to receive cash (often at high fees) and then use the currency for buy-ins at the tables or gaming devices.

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Because a consumer-friendly environment does not exist in Nevada casinos, vendors have derived workarounds. Debit Cards A recent innovation is called Playon, which allows players to withdraw funds from their bank accounts through debit transactions at the table or slot machine. The player can request withdrawals from a mobile ATM at the table, or an ATM device brought to the player. The player then uses a bank card and PIN to access the funds in their account to request a withdrawal. If the player's bank approves the transaction, the device produces a voucher in the amount of the withdrawal. The dealer treats the voucher as a standard buy-in, proofing to the surveillance and provides chips in the requisite amount to the player. The dealer then inserts the voucher into the dropbox for proper accounting. Credit Lines The major gaming device manufacturers, Konami, IGT, and SciGames, are developing card-based wallet systems where patrons can load their accounts through currency or permitted electronic transfers and then access those funds at the slot machine through a cashless wagering system by entering a secure PIN. A product called Marker Trax is available on the Konami System. Patrons enrolled in Cashless Wagering System can apply for and obtain a line of credit from the casino. They can use their mobile device to draw on that line of credit and make deposits to their accounts while physically at the gaming device. Proprietary Debit Card Sightline offers a Play+ product, launched initially with MGM, where patrons must join the MGM player club and are issued a proprietary debit card. The patron can add funds to the Play+ debit card by a bank debit card or eCheck using Sightline's proprietary network. The patron can use the Play+ debit card like a prepaid card at the gaming devices to fund their wagering account and could deposit winnings or unused credits back on to the Play+ debit card. The Play+ card can be used like any other debit card for purchases at other establishments on the Discovery network or to withdraw money at an ATM. Like a debit card, small fees are associated with ATM withdrawals.

Benefits of a Cashless Environment The primary reason to embrace a cashless environment is that it reflects societal trends in improving customer experience. As noted, Americans are not using or even carrying cash as much as they used to. Having the casino industry in Nevada lag other entertainment industries and casinos in other states reduces their competitiveness. Reducing the transmission of COVID-19 and other infectious diseases. Many casino patrons adhere to CDC guidelines, including shifting their spending habits to contactless payment. An American Gaming Association study reported that 59 percent of casino visitors are less likely to use cash because of the pandemic.45 Besides the COVID-19

45 Contessa Brewer, Coronavirus may sway regulators to allow casinos to say good-bye to cash, June 16,2020, https://www.cnbc.com/2020/06/16/coronavirus-may-sway-regulators-to-allow-casinos-to-say-good-bye-to-cash.html

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justifications, the advantages and disadvantages of moving the casino floor to a cashless environment are substantial, and include: 1. Reducing the costs associated with handling, accounting for, transporting, and

safeguarding banknotes. By introducing TITO, the casinos eliminated coins, token and hoppers, reduced patron and employee theft, and improved accountability. A cashless environment would have similar impacts by reducing the use and accounting for paper currency.

2. Providing the opportunity for casinos to track a patron's play and provide enriched gaming experiences tailored to the patron's interest, including bonuses and bridging to other promotion and spending activities offered at the resort.

3. Enabling more comprehensive oversight and monitoring by federal, state, and local authorities by providing for visibility on a real-time basis of suspicious and illegal transactions.

4. Reducing financial crime and simplifying anti-money laundering burdens, such as cash transaction reporting (CTR) and suspicious activity reports (SARS).46 Illegal transactions, such as unlawful gambling or drug operations, use cash to avoid leaving a record of the transaction and assist in money laundering schemes.47 Electronic transfers and chips involve no cash, eliminate CTRs, and reduce money-laundering potential. Only when a player withdraws cash at a cage or kiosk will the standard CTR procedures apply. While suspicious activity reports still need to be filed, the increased data available to the casino will deter criminals and make more comprehensive reporting possible.

5. Reducing ancillary crimes in or near the casinos. For example, the overall crime rate in Missouri decreased by 9.8 percent when the state implemented cash welfare benefits by using secured card technology called Electronic Benefit Transfer Cards.48 Moreover, if a credit card or mobile wallet is lost or stolen, a patron could still freeze the account remotely.

6. Facilitating international patrons. Cashless transactions accommodate and encourage international visits because customers no longer have to plan for nor worry about exchanging their currency for US currency. Nor do they need to consider the exchange rates or the risks of carrying large amounts of money.49

46 See 31 U.S.C. § 5315 47Justin Pritchard, The Pros and Cons of Moving to A Cashless Society, The Balance, June 10, 2020 https://www.thebalance.com/pros-and-cons-of-moving-to-a-cashless-society-4160702 48 IZA: Institute of Labor Economics. "Less Cash, Less Crime: Evidence From the Electronic Benefit Transfer Program," Page 2. Accessed June 10, 2020.“Cashlessness and Street Crime: A Cross-National Study of Direct Deposit Payment and Robbery Rates” by William Alex Pridemore, Sean Patrick Roche, and Meghan L. Rogers, here: https://uncw.edu/soccrm/programs/pridemore_roche_rogers_cashlessness_jq_2018.pdf 49Riju Dave Here are the advantages of cashless payments and the pitfalls you should beware, ET Bureau, Dec 12, 2016, https://economictimes.indiatimes.com/wealth/spend/going-cashless-is-it-good-for-you/articleshow/55908649.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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7. Tracking transactions to address problem gambling and promote budgeting. Having all transactions on record allows people to track spending and manage their budgets.50 The American Gaming Association points out that "Digital payments provide customers with more options to wager responsibly throughout their gaming experience. This starts with a limit setting — on how much they wager and how long to play — as part of account initiation."51

8. Maintaining competitiveness with casino offerings in other jurisdictions as well as online casino offerings. Nevada casinos face sophisticated competition from both online and mobile gaming companies.

Among the disadvantages are: 1. Electronic transfers expose users to hackers, identity theft, and abusers of lost or

stolen cards/mobile devices who, in turn, steal money or illegally use funds from the consumer's account.52 In most cases, however, the customer does not bear the financial loss under these circumstances. Because of the Fair Credit Billing Act, the user's liability for unauthorized use is no more than $50.53 Customers who use cashless payments have the responsibility to work with the card or the e-wallet provider to restore service.54 The Electronic Fund Transfer Act also restricts customer liability caused by the unlawful use of debit cards. Liability can increase to $500 or more if the unauthorized use on a stolen card occurs more than two business days after the card was lost or stolen.55 The consumer is not liable for unauthorized transactions when the cards are lost or stolen.

2. Service interruptions caused by glitches, outages, and innocent mistakes can make cards or e-wallets temporarily unavailable, and businesses may be prevented from

50https://economictimes.indiatimes.com/wealth/spend/going-cashless-is-it-good-for-you/articleshow/55908649.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppstId. 51 Contessa Brewer, Coronavirus may sway regulators to allow casinos to say good-bye to cash, June 16, 2020. https://www.cnbc.com/2020/06/16/coronavirus-may-sway-regulators-to-allow-casinos-to-say-good-bye-to-cash.html 52https://www.politico.eu/article/central-bankers-fear-cybersecurity-chaos-in-a-cashless-society/, https://www.cashmatters.org/blog/the-problem-with-a-cashless-society-according-to-central-banks/ 53 The Fair Credit Billing Act was adopted in 1974 as an amendment to the Truth in Lending Act (codified at 15 U.S.C. § 1601 et seq.). If a consumer reports the loss before your credit card is used, he or she has no liability under the Act. 54 Justin Pritchard, The Pros and Cons of Moving to a Cashless Society, The Balance, June 10, 2020 https://www.thebalance.com/pros-and-cons-of-moving-to-a-cashless-society-4160702 55 Liability for use of ATM or debit card before it is reported lost or stolen is $0 if no charges have been made, $50 if within 2 business days of learning of the loss or theft and $500, if more than two business days after learning of the loss or theft, but less than 60 calendar days after receipt of statement.

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accepting payments on the malfunctioned systems.56 These malfunctions are typically very brief, affecting only individual networks.57

3. Contrary to the benefits that cashless wagering brings to addressing responsible and problem gambling, it has disadvantages relating to both. Keith Whyte, executive director of the National Council on Problem Gambling, noted that "The faster you can access your funds and, in some cases, drain an entire bank account is a concern for people with gambling problems who tend to be highly impulsive."58

Evaluating Electronic Transfers and Cashless Wagering in the Casino Environment

In the casino environment, six factors differentiate the types of electronic transfers and cashless wagering: 1. Open or proprietary system. An open system is one where customers can use the

same payment system at a wide variety of businesses as opposed to a system unique to a business. An example of an open system is Apple Pay. Outside the casino, Apple Pay users can buy coffee, clothing, and most other goods or pay for services at a variety of stores using their iPhone. If Apple Pay was available at a casino, patrons could transfer money directly onto a gaming device. A closed system is one where the payment system is unique to the business and could only be used at that business. TITO and other cashless wagering systems in use are closed systems and are not available even for non-gaming activities outside or even at the same casino.

2. Anonymously or require the patron to provide personal data to use the system. This factor concerns whether a customer can make anonymous purchases such that the business does not capture customer data when the customer uses the payment mechanism.

3. Standalone systems or interface with a cashless wagering system. This factor concerns whether the electronic transfer can be made directly through a gaming device or table, or if it must be entered into a wagering account through a cashless wagering system before play can be conducted.

4. Contactless or not. This factor concerns whether the customer must interact with other people (to swipe a card/sign a receipt) or with any equipment, such as a touch screen on a kiosk monitor). A contactless environment allows the patron to access and

56 https://www.thebalance.com/pros-and-cons-of-moving-to-a-cashl https://www.consumer.ftc.gov/articles/0213-lost-or-stolen-credit-atm-and-debit-cards#:~:text=Credit%20Card%20Loss%20or%20Fraudulent%20Charges%20Under%20the,not%20responsible%20for%20any%20charges%20you%20didn%E2%80%99t%20authorize.ess-society-4160702 Justin Pritchard, The Pros And Cons Of Moving To A Cashless Society, The Balance, June 10, 2020 https://www.thebalance.com/pros-and-cons-of-moving-to-a-cashless-society-4160702 57Even casinos experience rare power outages that can impact play. Yasmina Chavez, Despite a casino power outage, gamblers unlikely to be left in dark on winnings, Las Vegas Sun, Nov. 23, 2016 https://lasvegassun.com/news/2016/nov/23/despite-a-casino-power-outage-or-other-emergency-g/ 58 Las Vegas casinos could ditch cash amid coronavirus fears. https://nypost.com/2020/06/29/las-vegas-casinos-could-ditch-cash-amid-coronavirus-fears/ https://www.wsj.com/articles/casinos-consider-cashless-gambling-to-fight-coronavirus-11593360002(Full Article Accessed via UNLV Library Database)

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transfer funds using an RFID or NFC device, card, or other artifact and complete an electronic transfer without having any physical touchpoints with person or machine.

5. Frictionless or multiple steps. The degree of friction in an electronic transfer refers to the burden on the player between wanting to gamble using electronic transfers and the actual act of gambling, often expressed in the number and difficulty of steps necessary to complete the transaction.

The State of Regulatory Controls and Restrictions on Cashless Payments in Nevada

Restrictions Regarding the Use of Cashless Wagering Systems Common Accounts In June 2017, the Nevada Gaming Commission amended regulations to allow casino patrons to establish a single wagering account for use on any gaming activity within the casino. Before this, Nevada law required individual accounts for each wagering activity, such as race wagering, sports wagering, and casino wagering. These changes responded to the directives of Senate Bill 9 (2015) designed to encourage new gaming regulations to promote advanced technologies in the gaming industry.59 Under these regulations, casinos can provide patrons with a single, broad-based "wagering account" for patrons to use all sanctioned games and gaming devices, including race books, sports books, mobile gaming systems, and interactive games. A casino can only use common wagering account systems in its own or affiliated casinos.60 Patron Registration A casino can only create a wagering account for a patron that registers online or in-person, and the casino obtains, verifies, and records the person's identification, date of birth, address, and the last four digits of their social security number. No anonymous or fictitious accounts are permitted.61 The patron must affirm that the information is accurate, acknowledge the rules for wagering accounts, agree not to let other people access the account, and consent to monitoring and recording by the casino and the regulators. The patron cannot use the account until he or she appears and presents a government-issued picture identification confirming their identity.62

59 https://www.leg.state.nv.us/Session/78th2015/Bills/SB/SB9.pdf 60 Nev. Gaming Comm. Reg. 5.225(3) 61Nev. Gaming Comm. Reg. 5.225(8) 62Nev. Gaming Comm. Reg. 5.225(7). Casinos can refuse to establish a wagering account, accept deposits, accept all or part of any wager for what it deems good reason, and suspend or close any wagering account at any time under the terms of the account agreement. Under the regulation, “When a wagering account is closed, the licensee shall immediately return the balance of the wagering account at the time of said action, subject to compliance with these regulations, the licensee’s house rules, and federal and state laws and regulations, by sending a check to the patron’s address of record or as otherwise provided pursuant to the terms of the wagering account agreement. Nev. Gaming Comm. Reg. 5.225

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Deposits and Withdrawals Patrons can deposit funds via cash deposits, personal checks, cashier's checks, wire transfers, and money order deposits made directly with or mailed to the casino; transfers from a patron's safekeeping or front money accounts at the casino; withdrawals from the patron's debit card, prepaid card, or credit card; transfers from another verified patron account controlled "through the automated clearing house or another mechanism designed to facilitate electronic commerce transactions"; funds from credit extensions or other means approved by the regulators.63 A patron can withdraw funds via cash, check, money order, wire transfer, safekeeping or front money accounts, credits to the patron's debit instrument, prepaid instrument, or credit card; transfers to another verified patron account, repayment of outstanding credit, or other means approved by the regulators.64 Nevada has not authorized cryptocurrency or other virtual currencies. Credits and Debits To Patron Accounts A casino can credit or debit a patron's account via deposits or withdrawals, amounts won or lost by the patron, transfers from a game or gaming device, adjustments based on the resolution of a dispute, or by the discretion of the regulators.65 The casino can credit an account for promotional credits or bonuses or debit the account for patron-authorized services or other transaction-related charges authorized by the patron.66 Casinos cannot allow a patron to overdraw his or her account unless caused by payment processing issues beyond the casino's control.67 Prohibitions on Credit Cards Casinos cannot allow patrons to use credit cards to fund play directly at a game or gaming device.68 The restriction on credit cards is in a technical standard that prohibits the use of credit cards for "direct wagering at a gaming device or an electronic funds transfer to a gaming device." No statutory provision prohibits credit card transactions; rather, the prohibition is entirely by technical standards. Restrictions on Debit Cards Casinos can allow patrons to use debit cards to fund play directly at a game or gaming device subject to restrictions. First, the casino must inform patrons that the patron's financial institution may approve funds for transfer from sources other than the account

63 Id. A patron cannot electronically transfer funds from their wagering account to another patron's wagering account. Nev. Gaming Comm. Reg. 5.225(14) 64 Id. 65Nev. Gaming Comm. Reg. 5.225(11) 66 Id. 67Nev. Gaming Comm. Reg. 5.225(15) 68 The technical standards regarding cashless wagering systems as promulgated under Regulation 14 can be found in Technical Standard 3 – Integrity of and Proper Account for On-Line Slot Systems and Cashless Wagering Systems. Standard 3 imposes a plethora of technical requirements upon manufacturers of cashless wagering systems, especially regarding these systems’ ability to properly document and archive transaction data.

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associated with the patron's debit instrument.69 Second, the patrons must be informed that system provides, "for a daily monetary transfer limit that does not exceed an amount per calendar day per debit instrument configured by the gaming establishment."70 Mandated Use of Cashless Wagering Systems Transfers, however, can only be done using a cashless wagering system. Manufacturers of equipment that transfers money must obtain a license. Before implementing a cashless wagering system, the casino must submit a written proposal for its implementation to the regulators. The submission must address the proper reporting of revenue, the satisfaction of minimum bankroll and reserve requirements, and compliance with internal control requirements. The regulations permit either the casino or "registered cash access and wagering instrument service provider or a licensed manufacturer to operate and maintain wagering accounts."71 All wagering accounts must be in Nevada, and the casino remains responsible for complying with all laws and regulations.72 Suspension of Accounts Wagering accounts must be suspended if unused for wagering for a consecutive 16-month period.73 Recordkeeping requirements Records of all wagering account activity, including registration information, withdrawals and credits, access information, and wagering activity, must be maintained for at least five years after creation.74 Confidentiality of Patron Data Casinos must keep wagering account activities confidential, including credits, debits, wagering amounts, account numbers, names, addresses, and secure identification means. Exceptions are for a licensed affiliated casino,75 the regulators, financial institutions participating in a program established under Section 314(b) of the USA Patriot Act, or as required by law.76

69 The notice must be conspicuously displayed on or at the gaming device or game where the cashless wagering system is accessible, or on a printed item given to the patron, See 3.150(2)(c). 70 See 3.150(2)(d) 71 Operation Of Gaming Establishments Proposed Amendments To .... https://gaming.nv.gov/modules/showdocument.aspx?documentid=12116 72Nev. Gaming Comm. Reg. 5.225(4) 73Nev. Gaming Comm. Reg. 5.225(16) 74Nev. Gaming Comm. Reg. 5.225(20) 75 A person who has been issued a nonrestricted license for an establishment where the licensee operates a race book or sports pool. 76The latter is significant, as it includes a court subpoena. Nev. Gaming Comm. Reg. 5.225 (19)

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Reserve Requirements Casinos must maintain a reserve in cash, cash equivalents, an irrevocable letter of credit, a bond, or a combination equal to the sum of all patrons' funds held in the wagering accounts.77 Licensing Requirements Nevada has two categories of suitability approvals for companies involved in cashless wagering and electronic funds transfers. The first category is registration. A manufacturer or distributor of equipment that can "add or subtract cash, cash equivalents, or wagering credits to a game, gaming device, or cashless wagering system" or interact with and affect cashless wagering systems must "register" as associated equipment manufacturers.78 Registration is a nebulous term under the statute as it relates to the depth of a licensing investigation because the Nevada Gaming Commission determines "the degree of review for an applicant for registration and may assign dissimilar reviews for different forms of associated equipment." The second category is full licensing, which extends to two different types of companies: those who (1) manufacture, produce, program, design, control the design of, or modify a cashless wagering system for use in Nevada79 or (2) operate as a cash access and wagering instrument service provider.80 Responsible Gaming Provisions Starting in 2021, casinos must present patrons with a configurable money transfer limit that cannot be changed more than once every 24 hours.81 The casino must inform the patron that the house rules apply to wagering accounts, the casino will provide a statement of account showing each wagering account deposit, withdrawal, credit, and debit, and that the patron can dispute any transaction.82 When a patron accesses their wagering account, the casino must display the following message:

77 A minimum of $25,000 is required if the total of all patron’s sums is below that amount. Nev. Gaming Comm. Reg. 5.225 78 NRS 463.665, See also, MANUFACTURERS, DISTRIBUTORS, OPERATORS OF INTER-CASINO .... https://gaming.nv.gov/modules/showdocument.aspx?documentid=2921 79 These definitions include directing or controlling the methods and processes used to design, develop, program, assemble, produce, fabricate, compose, and combine the components and other tangible objects of any cashless wagering system for use or play in Nevada or assemble or control the assembly of a cashless wagering system or interactive gaming system for use or play in Nevada, or to assume responsibility for any of these actions. NRS 463.01715 80 NRS 463.160(1)(e) 81 Nevada Gaming Control Board Technical Standard 3.150(2)(f). 82Nev. Gaming Comm. Reg. 5.225(18)

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[Licensee's name] encourages you to gamble responsibly. For problem gambling information and assistance, call the 24-hour confidential Problem Gamblers HelpLine at 1-800-522-4700, or visit www.WhenTheFunStops.org.83

Potential Regulatory and Statutory Changes State regulators need to be proactive in changing laws and regulations that inhibit the use of new cashless payment technologies. Nevada made significant progress toward cashless wagering with the adoption of Regulation 5.225 in May 2017. The May 2020 amendments to Regulation 14 made further progress, but are only a partial solution. Some additional changes may expedite the conversion. These include: 1. The definition of "cashless wagering systems" should be clarified and narrowly applied by regulation and ultimately clarified by statute. Nevada's definition of a "cashless wagering system" is meant to refer to account-based wagering systems and not the transfer of funds between the player and the casino. The definition should not be interpreted to apply to persons that expedite fund transfers. Such an interpretation would lack a policy basis and would create significant barriers to new technology providers and methodologies. These barriers include subjecting technology companies that provide commonly-used market solutions to needless licensing (discussed below), technological compliance, and testing. For example, the Gaming Control Board required Automated Cashless Systems, Inc., to obtain a Nevada Gaming License as a manufacturer and distributor in December 2017 after deeming its product to be a cashless wagering system. This product was not an account-based wagering system; it merely facilitated the patron's ability to withdraw money from a debit account to purchase chips at a table. In this case, either the application of the statute was incorrect, or the statute requires revisions to prevent application to facilitators of electronic transfers who do not manufacture or operate an account-based wagering system. 2. Licensing and registration should be relaxed or eliminated. Any licensing cost requirement will create some degree of an entry barrier. Cost is only one of the obstacles created by licensing. Others can result from the uncertainty of approval, time, opportunity costs, or risk to reputation. Where reasonably efficient, proactive technical standards, internal controls, and enforcement can provide quantifiable positive results. In this context, the imposition of licensing was an attempt to predict whether a future cashless wagering provider would likely defraud players. Nevada should consider repealing the licensing requirement for cashless wagering system providers and addressing any concerns with reasonable technical and accounting standards that will not create a severe barrier to entry. Patrons are already protected from loss by the required reserve requirements.

83 If either the helpline number or website address changes, the Chair may administratively approve the use of an alternative helpline number or website address.

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A. Cash access and wagering instrument service providers should not have to obtain a license. Under Nevada law, a "cash access and wagering instrument service provider" offers "services or devices for use by patrons of licensed gaming establishments to obtain cash or wagering instruments through a variety of automated methods, including, without limitation: wagering instrument issuance and redemption kiosks; or money transfers through mobile or Internet services."84 A cash access and wagering instrument service provider must obtain a Nevada gaming license.85 The potential application of this statute to the payment solutions used by an increasing number of Americans would significantly limit the expansion of a cashless environment in Nevada casinos. Apple Pay is a popular mobile wallet. Apple describes it as "an easy, secure, and private way to pay on iPhone, iPad, Apple Watch, and Mac without a physical card or cash."86 For the customer, Apple Pay has many attractive features. Here are some claims that Apple makes:

Apple Pay is safer than using a plastic credit, debit, or prepaid card. Every transaction on your iPhone, iPad, or Mac requires you to authenticate with Face ID, Touch ID, or your passcode. Your Apple Watch is protected by the passcode that only you know, and your passcode is required every time you put on your Apple Watch or when you pay using Apple Pay.87 Your card number and identity aren't shared with the merchant, and your actual card numbers aren't stored on your device or on Apple servers. When you pay in stores, neither Apple nor your device sends your actual card numbers to merchants.88 When you pay within apps and on the web in Safari, the merchant will only receive information like name, email address, billing, and shipping addresses that you authorize to share to fulfill your order. Apple Pay retains anonymous transaction information such as approximate purchase amount. This information can't be tied back to you and never includes what you're buying.89

Suppose a casino wanted to incorporate Apple Pay as a direct method of loading credits to a gaming device or table, and Apple agreed (which is doubtful currently). Would Apple have to obtain a Nevada gaming license? Apple Pay would appear to meet the definition of a cash access service provider under NRS 463.01395. Casino patrons could use Apple Pay to get cash or wagering instruments through money transfers using mobile or Internet services. The issue is that if the casinos could convince Apple to allow its product to be used in the casino, the likelihood that Apple would submit to licensing is extremely low. This would foreclose the casino industry from the most and secure popular e-wallet solutions and limit the solutions to

84 NRS 463.01395 85 NRS 463.160(1)(e) 86 About Apple Pay - Apple Support. https://support.apple.com/en-us/HT201469 87 Apple Pay FAQs. https://www.txdpscu.org/wp-content/uploads/2020/04/Apple-Pay-FAQs.pdf 88 Id. 89 Id.

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potentially more expensive casino industry-specific solutions offered by a small number of competitors. Concerns regarding patron fraud through electronic transfers are no longer compelling both because federal law severely limits patron liability, and security provisions through PCI DSS-compliance have proven effective.90 Nevada should not require any regulatory review for payment processors/solutions provided:

1. They are PCI DSS compliant, 2. Federal law limits the liability of patrons in such systems, and 3. The company offers the same service to businesses outside of the gaming industry.

Payment solution providers that are PCI DSS compliant and unique to the gaming industry should only have to register as associated equipment providers.

B. Licensing requirements for cashless wagering systems should be applied only to account-based wagering systems and not to companies that merely transfer of funds between the player and the casino. As an example, the Board required Automated Cashless Systems, Inc., a product which, as previously described, merely facilitates the patron's ability to withdraw money from a debit account to obtain a license as a cashless wagering system.

C. Manufacturers of cashless wagering systems should not have to undergo full licensing. The legislature justified requiring full licensing when adopting the statute in 1993 by noting the systems represented a potential source for patron fraud. This may have been a justification when the technology was new in 1991, and the ramifications were unknown. In the past decades, cashless systems in the retail industry have become ubiquitous. Licensing requirements should not prevent casino and gaming manufacturers from using the best solutions within their environments after assuming control over and responsibility for the product. Moreover, the technology behind cashless wagering systems provides a much more robust methodology to properly regulate the systems through technology reviews, internal controls, reporting, reviews, and audits. Patrons are already fully protected by mandated reserve requirements. Lastly, the government can address its interest in assuring proper accounting by internal controls and reporting requirements, particularly here where no significant reported problems have arisen in Nevada or any other jurisdictions regarding the corruption of the cashless wagering systems to avoid or frustrate state tax collection efforts.

90 PCI DSS is the payment card industry's data security standards that all major card brands and banks require. FinCEN stipulates four conditions for the payment processor exemption to apply to a business: (1) the entity providing the service must facilitate the purchase of goods or services, or the payment of bills for goods and services (other than money transmission itself); (2) the entity must operate through clearance and settlement systems that admit only BSA-regulated financial institutions; (3) the entity must provide the service pursuant to a formal agreement; and (4) the entity's agreement must be at a minimum with the seller or creditor that provided the goods or services and receive the funds.

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D. A more salient regulatory concern is the protection of patron data. Several large companies, including casinos, have been victims of illicit hackers in recent years, resulting in losses of customer data.91 This is a technology problem, not a licensing issue. A personal suitability review does not enhance technology security. Data breaches should raise greater regulatory scrutiny where operators of cashless wagering systems have access to customer data, including funding credentials. This is a legitimate concern in 2020. In these cases, the licensing requirement should be consistent with that imposed on other third-party vendors that have access to patron data and not determined based on the type of technology operated, serviced, or provided.

3. Patrons should be able to use a common account across all gaming and non-gaming transactions and fully integrate it with rewards programs. The regulations should permit the same account to be used for all gaming and non-gaming transactions by a casino licensee, including casino, race, and sports books. An immediate and more focused part of this recommendation is that NGC Regulation 26C.170 needs to be changed so that race and sports wagering accounts can be combined. This partial solution should be addressed if the proposed regulations, dated May 15, 2020, are adopted that remove the requirement of separate wagering accounts for pari-mutuel horse race wagering. Existing regulatory standards allow the casino to credit a patron account for promotional credits or bonuses. Regulators should be careful not to restrict casino from fully integrating future rewards innovations into wagering experience through the cashless wagering systems or direct to the patron. 4. Procedures for field trials for cashless wagering system approvals need to be significantly shorter and less expensive. The process for cashless wagering system approvals in Nevada is burdensome and expensive. When currently undertaking this task, the manufacturer must:

o Apply to one of two approved testing labs. This process typically takes 30-60 days and is influenced by the workload at the labs at any given time.

91https://www.upguard.com/blog/all-bets-off-on-casinos-and-cybersecurity, https://www.reuters.com/article/us-hard-rock-hotel-cybercrime-lasvegas-idUSKBN0NN01G20150502,https://www.csoonline.com/article/3089449/hard-rock-las-vegas-suffers-a-second-data-breach.htmlhttps://www.ktnv.com/13-investigates/downtown-las-vegas-casinos-suffer-mysterious-days-long-computer-outage-slot-machines-go-dark Hard Rock Hotel & Casino reports possible credit card security breach, Reuters, May 1, 2015, https://www.reuters.com/article/us-hard-rock-hotel-cybercrime-lasvegas-idUSKBN0NN01G20150502, Steve Ragan, Hard Rock Las Vegas suffers a second data breach, CSO, June 28, 2016, https://www.csoonline.com/article/3089449/hard-rock-las-vegas-suffers-a-second-data-breach.html, Downtown Las Vegas casinos suffer mysterious days-long computer outage, slot machines go dark, https://www.ktnv.com/13-investigates/downtown-las-vegas-casinos-suffer-mysterious-days-long-computer-outage-slot-machines-go-dark

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o After approval, the test lab's report must be sent to the technology division of the gaming control board, where approvals can take anywhere between 60 and 90 days.

o Finally, the system must undergo a field trial for 30 days. This minimum six-month process also can be expensive in both hard and soft costs. Submission and testing fees can approach $30,000 per submission and soft costs, including personnel to prepare the submissions, respond to inquiries, and supervise the process, which can increase the cost by up to $50,000 per submission. Therefore, manufacturers often bypass Nevada for a multitude of jurisdictions that permit installation after successful testing by an independent lab. The requirement that the Technology Division requests a white paper and compliance report in addition to meetings and correspondence is duplicative and should be eliminated. Cashless wagering systems need a fast-track approval methodology. Both Nevada and New Jersey adopted fast-track product approval programs for gaming devices only. In Nevada, manufacturers can install gaming devices meeting qualifications in limited field trials pending complete development, testing, or final regulatory approval.92 New Jersey's "New Jersey First" fast-track product approval program allows manufacturers to place gaming devices on a casino floor in as little as 14 days if they submit their product before or simultaneously with any other jurisdiction or testing lab.93 5. Casinos should not have to obtain approvals to implement new electronic transfer systems. In the United States, customers have the option of dozens of electronic transfer methodologies. In mobile wallets alone, customers use core providers like Apple, Chase, Google, Gyft, LG, Samsung, Starbucks, Venmo, Zelle, Square Cash, WeChat, and Amazon. This is a rapidly evolving space with new mobile wallets added regularly and their popularity shifting based on customer preference. Casinos should have the ability to internally assess payment transferring technologies and implement then without regulatory approvals. This would permit immediate response to patron preferences. Allowing the casinos to forego regulatory approvals would not jeopardize any gaming policy goals. These transfer systems do not touch or influence the integrity of the games or inhibit the accounting for or taxation of gaming revenues. Federal laws that govern the transfer providers adequately address legitimate government concerns regarding security, privacy, and anti-money laundering.94 In some matters, such as anti-money laundering, this alleviates some burdens on the casino for compliance.

92https://gaming.nv.gov/modules/showdocument.aspx?documentid=11629#:~:text=The%20New%20Innovation%20Beta%20(NIB,testing%2C%20or%20final%20regulatory%20approval.&text=The%20letter%20must%20contain%20the,aspect%20of%20the%20gaming%20device. 93 See NJAC 13:69E-1.28S 94 Wallet Overview of Laws, Regulations and References on Payment Security (Including Challenges and Improvement Opportunities), https://securepaymentstaskforce.org/learn-how-payments-work/payment-profiles/wallet/wallet-regulations-overview/.

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6. Nevada needs to prioritize and expedite the registration of associated equipment providers related to cashless wagering technologies. The Nevada casino industry must adapt to electronic payment technology and trends as quickly as other businesses, particularly those that are directly competitive gaming products or are otherwise vying for the consumer's discretionary dollars. 7. Nevada should permit credit card transactions. Nevada should not expect the public to conform its buying habits to the demands of its regulations; instead, the regulations should adapt to the public's buying habits. When New Jersey created its gaming industry, it gave minimal concern to the expectations of its potential patrons. It placed artificial restrictions on the issuance of credit, cash cashing, and other behaviors. The result was a competitive disadvantage to Nevada casinos. In the increased competitiveness of the casino industry in the United States, limits on patron choice have had and will have a financial impact. Nevada Technical Standard 3.150 creates a disparate treatment between credit and debit transactions as applied to electronic transfers despite permitting gambling on credit in every other context since 1931. The standard does not restrict the notion of wagering on credit, only gambling on credit issued by a merchant bank and not by the casino itself. Consequently, the prohibition serves only to inconvenience or penalize responsible patrons. For example, the use of a credit card may entitle the user to points or cashback. Moreover, the prohibition could be the basis for inhibiting the use of eWallets whose funding source is a credit card or bank credit line.

Responsible patrons are not the impetus behind 3.150's credit card prohibition. The efficacy of this credit card prohibition on problem gambling, however, is unclear because restricting only one form of borrowing is likely to have limited or no impact on problem gambling. For example, persons can secure cash advances against a credit card at kiosks near the casino cage and, after paying high fees, use this money to gamble. This and the other workarounds previously described, inhibits the public policy behind Standard 3.150. Instead, the prohibitions target a preferred technology platform for payments and discriminate against casino patrons who use their credit cards responsibly.

Still, Nevada and the gaming industry should address program gambling in a way that balances the gaming industry's contributions to the state economy and employment with the impact of problem gambling on a vulnerable subset of the population. In some respects, the use of electronic transfers may augment responsible gaming programs. First, the responsible gaming requirements imposed by Nevada regulations on the use of debit cards can be extended to credit cards, including messaging and patron-imposed daily use limits. Second, the casino can use either the gaming device screen or the patron's mobile device to push visualizations to inform patrons of their cumulative credit card spend. Third, these visualizations can be an intervention between the request for funds and the credit on the gaming device that disrupts continuous gambling. In addition, casinos could review all electronic payment transactions as a risk indicator in programs used to promote responsible gaming. As an early adopter, Nevada will have

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access to key data from cashless gaming transactions, which will be crucial for the study on responsible gaming. The data collected will allow researchers to study the behavior of people with and without gambling addictions and or disorders and even provide insight on preventive measures for those on the cusp of problem gambling. 8. Electronic transfers should be able to be made directly to gaming devices and tables. Under current regulations, only debit transactions can be made directly to a game or gaming device and then only through an approved cashless wagering system.95 This restriction is inconsistent with modern electronic payment methods. Because of their proprietary production nature, a cashless wagering system creates an additional layer of technologies and costs. Most casinos could justify this extra expense given the revenue-generating functionality of cashless wagering systems, including the augmentation of marketing through accessing, collecting, and analyzing more patron data. Casinos that decide to forego this additional level of technology and its related costs should be able to allow direct electronic transfers. Besides, some patrons value their privacy more than loyalty rewards. Overwhelmingly, a Pew Research Study revealed that 79 percent of Americans are concerned about the way that companies (and the government (64 percent)) are using their data.96 Furthermore, three-quarters of Americans believe that the data being collected is less secure than it was just five years ago. These patrons should have the option to make anonymous electronic transfers directly to games and gaming devices.

Regulatory Reforms That Remove Hurdles to Cashless Payments Are Only Half of the Solution

When discussing cashless wagering, the discussion most often centers on how to reduce the burden of regulations that restrict casinos' actions to implement solutions in response to patron demands. The other half of the solution, however, is government officials, both at the state and representing Nevada at the federal level, to assist in removing longstanding impediments that hold back the casino industry. For example, many credit card companies and other electronic transfer providers will not process charges for legal casino gambling. While Visa and MasterCard allow gambling-related credit card transactions on their networks, the decision regarding whether to process these charges is up to the card issuers. Likewise, PayPal prohibits the sending or receiving of payments related to gambling unless the transactions are associated with an approved merchant. These impediments need to be removed either through Federal law or regulation. The government, moreover, has other powers, including communication, and positive incentives to impact the transformation of the casino floor. Sweden is an example of a country that has been using incentives to realize the benefits of cashless payments. It eliminated the required infrastructure and created electronic know-your-customer (e-

95 Cashless is the New King, https://www.nvbar.org/wp-content/uploads/GLS_eNews_Qtr2_2020-FINAL.pdf 96 Brooke Auxier And Lee Rainie, Key Takeaways on Americans’ Views About Privacy, Surveillance and Data-Sharing, November 15, 2019, https://www.pewresearch.org/fact-tank/2019/11/15/key-takeaways-on-americans-views-about-privacy-surveillance-and-data-sharing/

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KYC) capabilities.97 Regulators should consider how to incentivize casino licensees that implement cashless environments.

97A tangential impact has been a surge in tax receipts, with the value-added tax rising nearly 30% over five years. South Korea went further and gave tax credits for up to 30% of spending on debit cards. Markus Massi, Godfrey Sullivan, Michael Strauß, and Mohammad Kha, How Cashless Payments Help Economies Grow, May 28, 2019, https://www.bcg.com/en-us/publications/2019/cashless-payments-help-economies-grow.aspx